Sales and Business Taxes in B.C.: 2026 Rates and Deadlines

B.C. tax rates in 2026 depend on what you earn, sell, or operate as a business. Provincial sales tax (PST), personal and corporate income taxes, and other business taxes each have different rates, rules, and deadlines. This guide breaks down the key sales and business taxes in B.C. for 2026, so you know which rates apply and when payments or filings are due.

Key takeaways

• B.C. businesses selling taxable goods, software, or services charge 7% PST, separate from the 5% federal GST.
• Canadian-controlled private corporations (CCPCs) pay a 2% B.C. small business rate on up to $500,000 of active business income, and 12% above that.
• Sole proprietors pay personal rates, which start at 5.60% in 2026 after B.C. raised the lowest rate from 5.06%.
• B.C. employers with over $1 million in payroll pay the Employer Health Tax (EHT), while film and interactive digital media producers claim B.C. tax credits.

B.C. tax changes for 2026

B.C. Budget 2026 raised the lowest personal income tax rate and removed several PST exemptions. The Province later paused its planned PST expansion to professional services. The changes below highlight the new rates, exemptions, credits, and rules that businesses and taxpayers need to account for this year.

Sales tax in B.C.

B.C. charges a 7% PST on most goods, software, and some services, separate from the 5% federal GST. Some items carry a different rate.

The Municipal and Regional District Tax (MRDT) adds up to 3% to short-term accommodation in participating B.C. municipalities and regional districts. Accommodation providers must collect the MRDT and report it on a separate return.

PST and GST apply separately to B.C. sales. PST is calculated before GST is added. For example, a $100 taxable sale has $7 in PST and $5 in GST, for a total of $112. A business that charges GST needs a GST/HST number from the Canada Revenue Agency (CRA).

PST does not provide input tax credits, unlike GST. Any PST a business pays on equipment, supplies, and other taxable purchases becomes a business cost.

To see how B.C.’s sales tax rules differ from other provinces, read Ownr’s Small Business Guide to Canadian Sales Tax Rates.

Does your business need to collect PST in British Columbia?

A B.C. business must register for PST if it sells or leases taxable goods, sells software or accommodation, repairs taxable goods, or provides legal, telecommunication, or online marketplace services. 

Services to goods, such as computer repair and vehicle maintenance, carry 7% PST in B.C.

A small seller qualifies for an exemption from PST registration if it has no established business premises and doesn’t regularly sell from commercial premises. A home-based business can still qualify, unless it sets aside space in the home for customer sales. 

Gross revenue from retail sales of eligible goods, software, and services must be $10,000 or less over the past 12 months, with the same estimate for the next 12.

See Bulletin PST 003 for the full eligibility requirements.

A business required to register as a PST collector is treated as a collector even if it has not registered.

Taxable goods and services in B.C.

Some of the goods and services PST applies to:

• The purchase or lease of new and used goods in B.C.
• Goods brought, sent, or delivered into B.C. for use in B.C.
• The purchase of:
  • Software
  • Services to goods such as vehicle maintenance, furniture assembly, computer repair
  • Accommodation
  • Legal services
  • Online marketplace services
  • Telecommunication services, including internet services and certain digital and electronic media content such as music and movies

Tax-exempt goods and services

B.C. exempts certain goods and services from PST, although some exemptions apply only under specific conditions. Common PST exemptions in B.C. include the following, per the Small Business Guide to PST:

• Food for human consumption, including basic groceries and restaurant meals (soda beverages are taxable)
• Books, including e-books, newspapers, and magazines
• Children’s clothing and footwear
• Qualifying bicycles and e-bikes
• Vitamins and dietary supplements
• Electricity
• Specified medications and health-related supplies
• Design and consulting services, unless they include taxable goods or software
• Personal services, such as hairstyling

Accounting and bookkeeping, architectural, engineering and geoscience, security, and non-residential real estate services also remain exempt while the Province’s planned PST expansion to these professional services stays on hold.

Register to collect PST in British Columbia

Businesses that need to collect PST can register through eTaxBC, B.C.’s online tax service. Registration is also available by mail, fax, or in person at a Service BC Centre.

After registering, businesses receive a PST number and reporting period. PST returns and payments are due by the last day of the month following the reporting period. 

Businesses with $1.5 million or more in total Canadian sales or leases in the previous 12 months must file and pay electronically through eTaxBC or a participating financial institution.

A business that does not have to register may still register voluntarily. Voluntary PST registration lets a B.C. business buy inventory for resale without paying PST (subject to the applicable requirements).

Corporate taxes in B.C.

A B.C. CCPC pays a combined federal and provincial rate of 11% on its first $500,000 of active business income and 27% above that. Sole proprietors pay personal rates instead, so these rates apply only once a business is incorporated.

Like other provinces, B.C. uses two corporate income tax rates, a lower small business rate and a higher general rate. B.C. sets its small business rate at 2% and its general rate at 12%.

• The 2% B.C. small business rate applies only to Canadian-controlled private corporations (CCPCs) claiming the federal small business deduction. The business limit is $500,000.
• The 12% general corporate tax rate applies only to income above the small-business limit and other income subject to the general rate. Investment income doesn’t qualify, so B.C. taxes it at the 12% general rate.

The CRA reduces the $500,000 limit for corporations with large taxable capital or high passive investment income.

Budget 2026 left both B.C. corporate rates unchanged, and the 12% general rate has applied since January 1, 2018.

Example tax calculation

Assume a CCPC has $650,000 of active business income, qualifies for the full $500,000 business limit, and has no tax credits.

How to pay corporate taxes in B.C.

A corporation must file a T2 Corporation Income Tax Return with the CRA within six months of its fiscal year-end. Every corporation must file its T2 return electronically for tax years starting after 2023, unless it falls into one of four exempt categories:

• Insurance corporations
• Non-resident corporations
• Corporations reporting in a functional currency
• Corporations exempt under section 149 of the Income Tax Act

The CRA charges a $1,000 penalty for failing to comply with the mandatory electronic filing requirement.

A B.C. corporation pays its balance owing within two months of its fiscal year-end, or within three months as an eligible CCPC. These payment deadlines come before the six-month T2 filing deadline.

Corporate tax credits in British Columbia

There is a range of corporate income tax credits in B.C. Your business may qualify for those credits if it’s involved in particular industries and activities. Some examples include:

Personal income tax

Sole proprietors and partners pay personal income tax on their net business income at 2026 B.C. rates, ranging from 5.60% on the first $50,363 to 20.50% on income above $265,545.

A sole proprietorship does not pay corporate income tax. Instead, the proprietor reports business income and expenses on their personal tax return. Partners similarly report their share of partnership income on their personal tax returns.

Ownr’s guide to starting a business in B.C. compares a sole proprietorship with a B.C. corporation.

B.C. tax brackets for 2026

B.C. uses a progressive tax system, so each tax rate applies only to the portion of taxable income that falls within that bracket.

Federal income tax also applies on top of B.C. provincial income tax. See the CRA’s current-year tax rates and income brackets for the applicable federal rates.

Tax calculators make it simple

A B.C. tax calculator can estimate your provincial and federal income tax based on your income, deductions, and other relevant details. Try Wealthsimple’s B.C. Income Tax Calculator for a 2026 estimate.

Income tax deductions

If you’re an entrepreneur with a small business, you likely have many expenses that you can deduct from your taxes in B.C. Basically, any reasonable small business expense used to generate business income can be tax-deductible.

Download Ownr’s tax guide for small businesses for a fuller walkthrough of common deductions.

Just make sure you save your receipts! They’re useful for backing up your expenses and will be required if you’re audited. Some of the types of small business expenses that can be deducted include:

Vehicle expenses

The deductible share of vehicle costs equals the business-use share of total kilometres driven in the year. Keep a logbook showing your total and business kilometres, along with details such as the date, destination, purpose, and distance of each business trip.

Home office expenses

The square-footage method divides workspace area by total home area to calculate the business-use share of home costs. 

Eligible costs can include mortgage interest or rent, utilities, and other qualifying expenses. The business-use-of-home deduction cannot create or increase a business loss, but you may carry unused amounts forward to a later year.

You can also read Ownr’s guide on whether rent is tax-deductible in Canada.

Other business expenses

Other expenses are deductible when they relate directly to the business.

• Phone
• Internet 
• Business supplies
• Software
• Travel

Employer Health Tax in B.C.

B.C. employers pay Employer Health Tax (EHT) only when their B.C. remuneration exceeds $1,000,000, while smaller payrolls are exempt.

Associated employers share a single $1,000,000 exemption, and a group whose combined B.C. payroll tops $1,500,000 gets no exemption at all. 

Employers file and pay Employer Health Tax through eTaxBC, the same portal as PST, with the return due March 31 of the following year. Employers required to pay instalments make them on June 15, September 15, and December 15.

When to pay your taxes in B.C.

Filing and payment deadlines in B.C. differ by business structure. The 2026 dates below apply to 2025 tax returns.

Incorporate with Ownr